What Singapore Can Teach the White House

Its health care is first class, cheap and market-driven.

Critics of this island-nation often have fun referring to it as the "nanny state" for its laws against spitting, littering, or leaving behind an unflushed loo.

When it comes to health care, however, Uncle Sam has better claim to the nanny title. From our federal price "negotiations" and state regulations to discrimination in the tax code, government distortions prop up a system that puts key health-care decisions in the hands of everyone but the patient. Each new government intrusion, moreover, begets only higher costs—and a call for more intervention to fix the problem.

In Singapore, by contrast, they already have universal coverage. They also have world-class quality care at world-competitive prices. And in a week when White House chief of staff Rahm Emanuel is meeting behind closed doors with Senate Majority Leader Harry Reid, Singapore's example might have something to teach them about the kind of reform Americans really need.

"When I'm asked to describe the differences between the U.S. and Singapore systems, my one-word answer is 'complexity,'" says Dr. Jason Yap, director of marketing for Raffles Hospital, a leading private care facility in downtown Singapore. "There are so many parties in the American system that do not really contribute to care."

Dr. Yap is referring to the higher costs that come from an American system that depends on regulation and oversight to accomplish what Singapore tries to do with competition and choice. At the Raffles lounge for international patients, he shows me an example of the latter. It's a one-page, easy-to-read list of fees.

At the high end of accommodation, a patient can choose the Raffles/Victory suite for about $1,438 per night. That price includes a 24-hour private nurse, a refrigerator stocked with drinks, and an adjoining living room to entertain. At the other end of the scale, a bed in a six-person room goes for just $99.

As Dr. Yap points out, the actual care is the same whether a patient decides to stay in a deluxe suite or a dormitory-style room. But the choice is the patient's; the financial incentives encourage the patient to think about those choices; and the low-priced options help keep the overall costs down.

This is no accident. Like ours, Singapore's system is a mix of public and private care and financing. Unlike ours, Singapore's system is anchored, as the Ministry of Health puts it, "on the twin philosophies of individual responsibility and affordable health care for all."

"Individual responsibility" is not just a buzzword. All but the abjectly poor have to pay for some of their care, another downward pressure on prices. Perhaps most important, almost all working Singaporeans are required to put money in a medical savings account that they use for out of pocket expenses. It's their money, and they control it. As a result, they are careful about spending it.

It seems to be working. According to a Raffles Hospital official, a knee replacement surgery runs between U.S. $12,000 and $14,000. Spinal fusion runs between $10,500 and $14,000, and a heart bypass (coronary artery bypass graft) from $23,000 to $26,500. Conservatively speaking, these prices are less than a third of what the same procedure would cost in the U.S.—that is, when you can even get the price.

As any American who has ever tried to make sense of a hospital bill or haggled with his insurance company over a payment can tell you, even for those who have decent coverage our system can be a bureaucratic nightmare. Singapore's system isn't perfect. It does suggest, however, that the Average Joe stands more to gain from a system where hospitals and doctors compete for patients, where patients have different price options for their hospital stays and appointments, and where they pay for some of it out of pocket.

Yes, a city-state with three million citizens has some advantages over a nation of more than 300 million people in 50 states. Yes, health care in Singapore is hardly the laissez-faire ideal. Still, there's intervention and there's intervention: What makes Singapore's health care work is that it is designed to swim with the market and not against it.

In macro terms, that means Singaporeans spend only about 4% of GDP on health care—against 17% for the United States. At the same time, Singapore scores better than the U.S. on life expectancy, infant mortality, and other key international measures.

In his address to Congress last month, President Obama complained that "we spend one and a half times more per person on health care than any other country, but we aren't any healthier for it." That's a good point. And the lessons Singapore has to offer suggests that what Americans need most in Washington today are fewer closed-door meetings and more open minds.

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